Top Story : Property – Bullish outlook for developers Overweight
Sector Update
♦ Three key points support our bullish stance on the property sector: a) Strong sales momentum despite rate hike, supported by: a) high affordability; and b) home buyers are rushing to buy properties to capitalise on current cheap financial packages before further rate hike amidst the economic recovery; b) Pent-up
demand is supported by aggressive property launches by developers. Apart from higher property sales, we also expect better margins for developers due to the gradual withdrawals of housing incentives offered; and c) No housing bubble in the local property market, hence, lesser policy risk compared to regional peers.
♦ Prices are expected to be well supported with continued buying interest by the locals. We also expect increasing participation of foreign buyers ahead given: a) relatively cheap property prices in Malaysia compared to regional peers; b) anticipation of stronger exchange rate; and c) expect more active foreign
participation as confidence in the new economic model gathers momentum.
♦ Maintain Overweight on the property sector.
♦ Top picks: IJM Land (OP, FV = RM3.19), Suncity (OP, FV = RM5.33) and Mah Sing (OP, FV = RM2.45).
RHB Equity 360° (Property, Banks, Sunway, Tan Chong, MAHB, KLCC; Technical: Tanjong) - 02/04/2010
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